>> rose: welcome to the program. tonight michael gordon chief military correspondent of the "new york times" on syria and whether the president may be reconsidering the use of american weapons supplied to the rebels. the concern president obama had lying weapons would in effect be involved in a proxy war supported by iran and russia. the other side of the debate is nothing else is working and we need to create pressure on assad and build relationship with people inside syria who might take over one day. another factor is there are rebels, al-qaeda affiliated rebels the united states and the west doesn't support. and i don't think it's in the

west's interest to see them end up at the top of the heap. >> rose: and then we turn to the story of the chinese army spying on the american government and american companies with david sanger of the "new york times," dune lawrence and michael riley of bloomberghas been off to the side as something of an annoyance. i'm hearing this has gotten so big it's moving to the center of the relationship and it risks the rest of the relationship. i think the next thing you're going to see the president sending some kind of envoy to beijing to make that point. >> rose: the conflict in syria and spying on the united states by the chinese army when we continue.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin tonight with a look at the crises in syria. nearly 70,000 people have died in one of the most deadly civil wars in recent history.

two years in and the community has debated how to intervene. the united states has given nearly $400 million in humanitarian aid. he's remained fragmented and disorganized. as the violence skates the united states has increasing efforts to arm the groups. joining me is michael gordon the chief military correspondent for the "new york times." i'm please to do have him on this program. welcome. >> nice to be here. >> much to talk about. let me begin with syria. we all know from congressional testimony from leon panetta the former sect of defense and others that there was a recommendation from leon panetta and from david petraeus at ci and from hillary clinton at state to do something. >> so what happened, i believe, and i did a lot of reporting on it. and actually it was an article that i worked on with mark rangler that was the basis of

the question that elicited secretary panetta's response. in iraq training the troops was looking for a way in syria. he wanted not only to influence the situation on the ground now but assuming assad is deposed, the thought was it would be beneficial from the united states had some stronger relationships with the fighting groups of groups inside syria. the people actually in control the ground. then secretary of state hillary clinton supported that argument. so did leon panetta and general dempsey. that was brought to the whitehouse before the election not a political climb to do something controversial like that but it would have been a limited operation in the sense they weren't going to provide what they call man pads, air defense weapons because they

didn't want to risk them falling into the wrong hands and endangering israeli and other civilian aircraft. anyway it came to the attention of the whitehouse, it was discussed president obama decided against it at the time and others who counseled against the proposal including vice president biden, tom dawn lynn who was recently a your show the national security advisor and susan rice. those are kind of the two camps, the whitehouse against the rest of the government as it existed at that time. but now we have a new national security team. >> rose: where was dennis mcdough know. >> i don't know where he was for a fact but i know dennis was very close to president obama. and i would probably put him in the camp of those being cautious about getting more deeply involved in the crises. and i think the argument would have lined up this way.

on the side of caution, you know, you would be getting more deeply involved. and i think the concern president obama had was by supplying weapons would be in effect involved in a approximately war against a regime supported by iran and russia. on the other side of the debate the argument was well nothing else is working and we need to increase the pressure on assad and also build the relationship with the people inside syria who might take over one day. another factor is there are rebels jihaddists, al-qaeda rebels that the u.s. doesn't support. i don't want to see them at the top of the heap. >> rose: that's always the answer to the question people always ask. suppose you win what then. >> it's a good question. right now they're not winning. right now you have a situation where assad is pretty entrenched and the rebels are making gammons -- games but they don't

seem to be decisive yet. >> rose: able to close the deal. >> not yet. so you're looking at a fairly drawn out conflict. one of the concerns people have is if the conflict is drawn out much longer, there won't be much left to hand over to oppose the assad regime. the whole mechanism and institutions of the state will have been destroyed. >> rose: let me make sure i understand. i have your piece in front of me and i read it several times. you are reporting from people within the whitehouse they're beginning to consider as a condition deteriorates reopening that debate. is that the extent of what you're saying. >> the way i would put it is they haven't ruled it out and down the road they may reconsider it. and really the emphasis right now, secretary kerry's going on a foreign trip at the end of this week and some of it's devoted to the situation in

syria. and i think really the emphasis now is more on the diplomatic track trying to find a way to get talks started between the resistance and some elements of the regime, trying to get the russians to be more supportive. so i think that's where the emphasis is. but if that doesn't work out and i think that is always a problematic course at the current time. what people are saying is the whitehouse has not ruled out revisiting the arms issue. >> rose: right, got you. is there consensus among multiple countries to do something or is there an unwillingness for anybody to step forward at this time and do anything significant? >> i think there is a different views. i mean iran is supporting the assad regime with arms and paramilitary advisors. russia is fulfilling arms contracts to the assad reregime

and helping them. so i think russia's interested in diplomatic outcome in which maybe some elements of the regime are represented in a transition and russia retains its influence and even have a naval base in syria. i believe europe is a bit divided. the brits wanted to see the european union ban on arms shipments expired which would at least open the door to possible army of the resistance and make it legally possible for them. other elements over other countries in europe didn't want to go that far. the friendship didn't particularly engage because of their past -- >> rose: i think they've drawn the line, have they not in terms of what they're prepared to do in syria so far. the french. >> well, you know, i just saw madeline albright you interviewed in your program. there is a role in these situations for american

leadership. and people do take their cues from the united states to certain extent. so i think in an environment in which the united states has decided arming is too risky, that sends a message to the rest of the world community whether you agree with it or whether you don't agree with it. i think if the american position were to change, it's possible that the western european position would change as well. >> rose: let me go to a country which you reported a lot, iraq. the lead story right hand column, iran -- attacks on u.s. forces. the iranian back shiite group responsible for the attack in the final year of the iraqi war is reinventing itself in ways that could influence influence in post american iraq and perhaps beyond.

you know that country and you know that situation. >> right. the group is -- and they're lead by the -- brothers and those individuals were implicated in a nefarious attack on a group of american soldiers who were advising the local government during the war with a botched kidnapping and led to the death of a group of soldiers i think five of them i call and headed by hezbollah recently released in custody and returned to lebanon. so it's a group that at the time the americans were there was certainly very much, well, was involved in armed operations against united states. there's a so-called effort at reconciliations going on inside iraq in an attempt to try to rehabilitate the group and get them inside politics. and i guess the story says that

it's now inside politics and trying to become influential. but i don't know how strong a voice they're going to have in the shiite community at this time. >> rose: but there is a natural affinity between iran and the shia community and iraq, is there not. >> there is and there isn't. i mean it's a -- iraq is the majority is shia. there's a whole array of groups. there's supreme council was a group that was rather prominent. not all of them have so cozy a relationship with iran at this point in time. iran has spent, according to quickie leak they spent $100 billion supporting shia groups, sponsoring them and making sure they had some sort of say in iraq politics. that said, some groups are

closer to iran than others and this group is one of the ones that is close to iraq. >> rose: because much al-qaeda is sunni, what's the dynamic of the relationship between the two? >> well, it's sometimes been assumed that because iran is a persian shia state and al-qaeda is a -- there can never be any sort of supporting relationship. during the iraq war there was intelligence reports that iran was providing some, at least some degree of cooperation or assistance to al-qaeda and iraq and some of the sunni extremists on the grounds that the enemy of my enemy is my friend and they were just trying to ratchet up

the pressure on americans. i think the values majority of the awe since iranians provided -- to shia militants. it went to what the military calls special groups. iran had a stake in iraq and they pursued through military ends to their proxies and groups trained in iran even and go into iraq, iraqi groups and through their diplomacy. they played it through hard power and they played it through soft power. >> rose: has consequential have sanctions been on iranian behavior. >> well they certainly affected the economy, had a huge effect on the economy and led to the devaluation of the iranian currency. but it's an excellent question because there's some talks coming up now in kazakhstan of all places in late february involving the eu, the united

states and the iranians. and so this is going to be a venue in which people are going to be able to see to a certain extent how serious iran is about negotiating on limits on its nuclear program. there hasn't been negotiations for some significant period of time. and this is an opportunity to test the iranians. i think this initial round is not going to prove much but certainly over the next six months, i think there will be an ample opportunity to see if there is an intent on the iranian part to reach some sort of compromise. >> rose: leon panetta and others have said the following. we have no information that there's been a decision on the part of the iranian government and the most influential people there to builds a nuclear weapon and a missile that will deliver it. what do they mean when they say

that? >> well, i can't really speak for them but i think it's pretty clear that iran has made the decision to have a nuclear weapons program. and there's really nothing el that explains kind of procurement. >> rose: you know panetta have said that. >> i think probably what people mean by that is they're moving down the road. the question is will they get to the end of the road or is there a diplomatic solution before then or a military confrontation. because remember president obama has said that he will not allow iran to have a nuclear weapon. so i think what people are saying is, they're making rich uranium for weapon, working on design work and some missile work. but what's not yet clear, i guess what secretary panetta is saying, whether they're going to make the final hundred yards dash to assemble and feel the

weapon. the dilemma though is for the west, you can't afford to stop them just short of that final screwdriver turn or else you really have to contrain them in any meaningful way. what these negotiations aim to do is try to find some kind of way to constrain the iranians enough that they are clearly short of a nuclear weapon and the west would have sufficient warning should they break out of the awe -- agreement and make a dash for it. >> what would the west consider sufficient warning? >> well, i don't know what their intelligence means are on this but something so that you have months and not days of indication that iran is trying to, and also the means to do something about it. i mean if you take president obama at his word and i don't see any reason not to, he said

that he will not permit iran to have a nuclear weapon and may need to resort to military force. well then you need to have something you could use that military force against if they have all the makings of a bomb or it's in a clandestine facility and you don't know where it is, then while you may have some warning that something's going on, you don't have the means of influencing the situation. so i think all of these intelligence considerations you know is subject of a big debate between israel and the united states a few months ago. but i think they inform or at least i assume they inform kind of the u.s. position in the talks . >> rose: we continue to find that the hottest place in the world for potential conflict is in the middle east and now in possibly in africa because of al-qaeda's presence. where are the unfocused hot spots in the world likely to

erupt that are not yet, have not yet reached that point. >> well, i mean it's interesting. you know you don't hear a whole lot of talk except perhaps from the whitehouse about the asia pivot because you can't pivot to asia when the middle east is such a caldron in difficulties. i think next year will be how the negotiation reaches outcome or it won't and the administration has to make a choice. i think syria is bad and getting worse every day. and it has a potential to destabilize the region around it. it's beginning to overlap its borders a little bit. yemen is something the french or mali is something the french are doing something about, sending troops there. that doesn't have the threat to

what they call aqim, al-qaeda islamic, doesn't have the ability to strike the more than homeland but there are a lot of french maliians. there are parts of world that don't involve us but still quite a calamity. pakistan and india came to blows, there's still a lot of residual tensions there. and it really remains to be seen how the american reduction and eventual withdrawal of american forces for afghanistan will effect that entire region. because there's a battle for influence within afghanistan clearly between indians and pack stages. >> rose: do we assume if in fact the of gun portions are not strong enough after the united states leaves to with stan the taliban and the taliban is able to gain somewhat approaching the

power they had previously when they had power, that they would welcome al-qaeda back. >> well, you know, one of the big questions that has not been answered by the president's advisors is what's the american military presence going to be after 2014. in the state of the union, he said we'll be down basically by half a year from now. there are 66,000 now. at the end of the february next year it will be 32,000. but what happens after 2014 when the so-called war is over and there are a whole number of options on the table, anywhere i'd say from 3,000 troops to 10,000 troops or 9,000 troops. and also the capabilities that could be kept in the country from the u.s. side counterterrorism error and all that. so i think what military posture the u.s. agrees to keep in after

2014, and that will effect what nato agrees to do, are the non-u.s. part of nato i think will have a big effect what happens in afghanistan in terms of this question. we should be able to preclude that if that's what we're determined to do. >> rose: finally, are you suggesting that you think that the conflict in syria could be prolonged. that there is no imminent end result likely to happen unless somebody from his own side decides to assassinate assad. >> i think in the conflict continues as it's going and i've heard experts talk about this that it's possible the state may fragment in some sort of bosnia like way that there will be sunni communities and kurdish communities. it will be like syria several

years ago several pockets supported by different outside interests and iran will support the assad al wite factions and sunni will support the sunni parts and syria may sort of cease to exist as a functioning kind of entity. and so i think that recognition and the possibility that islamic extremists may come to exercise outside power, extraordinary amount of influence within the country i think is what is adding a little bit of urgency to the american kind of liberations about how to handle. >> rose: michael gordon chief military correspondent for the new the "new york times." thank you so much. >> thank you. >> rose: the threat from cyber attacks is on the rise. an american security firm that has attracted chinese hackers for several years will release a report tomorrow.

it makes a strong case that china's army's behind most of the attacks on the american government and companies. chinese officials have denied the accusations but the u.s. government remains suspicious of state involvement. president obama recently expressed concern over the ability of foreign hackers to compromise critical american infrastructure the pentagon is planning a range of defensive measures including a massive expansion of its own signer security force. joining me to discuss the developing background is david sanger of the "new york times." he cowrote today's front page story on the subject. joining us later is dune lawrence of bloomberg businessweek if and michael riley of bloomberg. they are learning everything they could. >> so far it's clear they've been into those systems it's not clear they've ever done anything

to them. >> rose: why -- >> that's the remarkable question charlie. always the issue is intent and the degree to which the political leadership in china actually is knowledgeable about this and to what degree of control it has over it. because chinese command and control is not always what we image it from afar. in this case, unit 61398 which is the major cyber intelligence unit for the pla but not their own cyber operation. sort of their equivalent of the national security agency or our cyber command which is located at the national security agency in fort mead. >> rose: carmen alexander, is it. >> that's right. and the american facility is both about monitoring what's happening around the world and the tax community in the united states and are growing all kinds of capability. we can come back to that much in the chinese case what's been interesting is that most of

their attacks until recently have not been on government institutionsor even the media. they've been on american corporations sweeping up bytes of data whether it is lockheed company. >> rose: the new york sometimes. >> that's part of the interesting change in recent times that we have seen attacks on the times, the post and the "wall street journal." we suspect it wasn't this unit not the unit we wrote about, a different group. we suspect that they were looking for sources of stories that david, one of my colleagues wrote about the chinese. we don't know that for a fact but just looking at the patterns -- right. series of pieces about the former prime minister and his family fortune, very sensitive issue in china. but there have been other cases in recent times where they have

gone after foreign policy elite of the united states. there was a fascinating attack on the council and foreign relations here in new york where the attack wasn't really aimed at getting material out of the counsel's computer systems, most of what's in there is opening available. probably be perfectly delayed if the chinese went and read it all. but instead it's what's called a water hole attack. think of animals coming to the watering hole. in this case the animals of the foreign policy elite, they see who is coming and they follow them back home to their home computers. a fascinating element. there were aspects of the -- institute and easy to imagine attacks on the media could be the same thing as well. whether they want to follow regular users. >> rose: do we assume if they want to attack they can find a way. they can hack into some degree or not. >> you always have to assume

that you could. and it's not all that difficult to go do. what's remarkable about the report that was done by -- a computer security firm. it's one that the times brought in when it was attacked by a different chinese group. but this report followed a couple of individual hackers who worked for a group called itself comet crew. got that name because they put their mal ware, the malicious inside the web pages. once it got into a computer system. i not they were in and out for a day they would stay around on an average of a year and sometimes several years. >> rose: doing what? >> well mostly sucking up lots of data. there is one comment crew attack that we described in this one story that was aimed at a small canadian company called or a

canadian subsidiary of a company called tellvent that runs the oil and gas pipelines that run through the united states and down into mexico. to say they run it is to say they designed the software that turn on and off the valves. it's interesting to wonder what it is that comet crew wanted to learn from being able to turn on and off those valves. >> rose: you say they've been active until 2006. >> common crew has been active for a long time and is probably the group that is responsible for the widest number of attacks but when you chart the attacks and we put a chart on the paper today and on the website what you discovered is estimated dramatically starting sometime in 2010 running through the most two years. >> rose: so what is the united states going to do about this? >> well that is a very difficult question because this is different than the old cold war spy versus spy stuff that you think about in the 50's and the

60's and the 70's where you know you would find the soviet spy over at the united nations, looking at american defense facilities and if they got egregious enough they would throw them out of the country and the russians would throw a few american out of the country. in this case, we've got one of america's largest economic partners, largest competitors, a country with which we have many other he can tease. we're worried about the who health of the china sea and other claims the chinese are making and worried about the military competition. the cyber has sort of been off at the side as something of an annoyance. what's happening now for the first time i'm hearing senior government officials telling me, many of them, this has gotten so big it's moving to the center of the relationship and the risks the rest of the relationship. and i think the next thing you're going to is the president sending some kind of envoy to

beijing to make that point. >> rose: to say to them stop it or. >> that's the problem. it's the or what. okay. so what happens every time they have these meetings. and i've spoken to many government officials who sat through many of these meetings with the chinese. they come in and say we've got a big problem and maybe your army is involved and they look and they say oh we're victims of cyber attacks ourselves. look at the different institutions that have gotten attacked and i'm sure some of them have. then they start talk big this like you've got drug dealers we've got drug dealers we really ought to come up with a drug policy. if the obama operation is going to make a difference had he have to make it clear there's some kind of price for this because right now there really is no price for it. there's no government regulation of it, no treaties. one of the reasons that the u.s. government does not get into

treaties on cyber is it doesn't wanted to admit it's got cyber offensive weapons of its own. >> rose: is it also like the situation in which as soon as you develop some kind of security, they develop some way to pierce that security because as you get sophisticated, they get sophisticated. >> it is charlie and in that regard it's a little bit like the days when the russians develop missiles and we develop anti-missile systems and they develop systems to defeat the anti- there's always that escalation. but in this case it's much more of an asymmetric war because the chinese have lots more to learn from us. designs, blue print, software. because of the relative status of the economy, the point of development. than the united states has to learn from china. that isn't to say we have nothing to learn from inside china, but right now the chinese have more to learn. american officials tell me if the u.s. has cyber weapons if

there's much doubt after what the u.s. did to iran. if the u.s. had cyber weapons it would not deploy them on behalf of american companies. they would simply use it for national security threats. if the chinese seem perfectly happy to use them on behalf of state run companies. >> rose: most of the chinese attacks are by governments who give the information to private -- to companies. >> some contractors and this is the fascinating thing of untang ling unit 61398. the reason we went about leaping on the very good work mandy did in this report and talking to other experts. until now everybody has assumed the chinese military has some role in this but they've never sort of taken it to the front door. what the mandy report did is it isolated it down to a neighborhood, the one you read. they couldn't go in the door of that 12 story building. but all of the digital bread

crumbs led them right to the neighborhood. it's either that building or the noodle shops around it. >> rose: i think mike rodgers said in your piece the republican chairman of the committee said the only way, this will continue to accelerate unless you figure out a way to stop it. >> that's right. >> rose: you got to have something you can say to the chinese that will compel them to stop. what might that be? >> well, when i interviewed mr. rogers, he had a couple of ideas. i'm not sure whether any of them would work. one is you would deny visas to some chinese who want to come to the united states or deny visas to their families. that's a little bit like the old expelling of diplomats we said before. >> rose: doesn't sound threatening to me. >> doesn't sound terribly. the second is you could deny them access to more technology. but with china, that's a more difficult issue. i mean here's a country that is

investing in a lot of american companies. their capital is usually welcome. certainly their capital is welcome when it comes to buying up our debt. i don't think the chinese is going to turn around and start selling american treasury notes because of the dispute over cyber. but if thing got rough enough and they saw a better place to put their money they might stop buying it. >> or they could dump it although the argument goes if they dump it they hurt themselves. they hurt themselves, that's right. the question is how can you raise the price. one thing the u.s. government could do raise the price is to expose these groups not wait for private companies to do it but for the government themselves to do it. because suddenly it would make doing business with trying to look to be a riskier operation. a little bit like the way the u.s. has operated with the iran sanction where the idea was to say you can do business with iran but if you do, you're taking a big risk because there

could be more sanctions on banking, shipping and so forth. >> rose: any new developments in terms that that question you have written about extensively in the last ten years. >> the relation to cyber is one of the difficulties for the u.s. in holding this discussion u.s. is not coming to this with clean hands. the attack on the iranian enrichment plans that was an american israeli operations. one of the concerns president obama had when he was approving this program that started with the bush administration was that eventually other countries recognizing what was happening would say well, the united states is doing it to iran, why can't we do it to the united states. and i think you're seeing a little of that going on. the something thing that's going on with iran right now is finally there's going to be a round of talks that will start

in late february. next week, in fact. and that's not likely i think to take everybody very far but it's the first time the two countries have talked since last summer. it looks like the iranians are deliberately slowing down the rate at which they are producing the nuclear fuel that the u.s. is most concerned about. they don't reach the level -- >> rose: does that mean they stopped the operation of the centrifuges. >> they haven't stopped the operation of the centrifuges. as the centrifuges turn out material they are turn out an amount into a fuel for certain reactor they have more than they really need. it's to keep the amount of medium enriched uranium to a level below that level where they think the israelis might come in and take military action. thee -- they've sort of got

their hand on the throttle. we'll more about this on friday when the international atomic energy agency begins to circulate its latest report which includes the inventories here. at the same time the supreme leader has said we're not negotiating away the right to produce including inside a deep underground site at the mountain that has the israelis and americans most worried. if i had to guess charlie i would guess this sputters on for a long time. neither president obama nor the premium leader has a great interest in the military confrontation happening. but at some point you run out of time. >> rose: david sanger, thank you. >> thank you charlie. >> rose: the "new york times" seeing it is related to the u.s. >> joining me now in new york,

dune lawrence and michael riley. first of all congratulations this is a cover story of bloomberg businessweek. yes the chinese army is spying on you. question is how do you know. >> that's a direct question. well, we start out with some cyber security experts. these are the people who really do know and they are the ones creating, mapping this universe of the chinese buying infrastructure. so we looked at one guy, joe stuart. mal ware is a blanket term for malicious software that can take over your computer. that's where they start. they start with these samples of malicious software. they study the software, where the software is are homing home to and they built this kind of universe of kind of the chinese

spying software, chinese big infrastructure on the internet. that still leads the question of who is behind all that, the people behind it and the orangion behind it. >> rose: how do you find that out. >> that takes more digging and some lucky breaks that we found when we talked to joe and also another cyber security researcher who kind of took his research a little further. the hackers have to make mistakes and let their margin identity weaken which you've been doing it for a long time. let's start you started as a student and doing it free lance and you started to work in some capacity. these people having doing it for a long time. if at some point years ago you used the same identity for something personal as opposed to something work related the internet has a long memory, it has a really long memory that's the thing. it's easy to hide but it's hard to erase. >> a really fast way of checking

selections. when you start out with this story what did you want to do. >> we wanted to put a face on what this phenomena is about. it's easy, anonymity, the internet is a place where you can commit crimes with great anonymity. and it's traditionally difficult to figure out individuals who are doing it but even countries who are doing it. and that's really the big story that you have to know sort of who is doing it to understand why they're attacking you, why they're taking what they're taking and what they're doing with it. for years the chinese government has absolutely denied it's been behind any of what the security researchers say is a massive rifle of u.s. corporate networks and the theft of ip alexander who is head of the ipa calls it wealth of history. we want to be able to connect the dots to get beyond those denials and put a personal story to it. this happened to be a terrific

story because the guy also, he length his personality through on social posts and we're able to connect the dots where you can say this is actually a gun. >> rose: you had joe stuart and lead you to the kind of things you wanted to know. >> what interested joe about this case in discovery of a personal business kind of a sideline business where it's unrelated to hacking. that's when he said his ears perked up and said this is something i don't usually see and i'm used to seeing hacking. but an actual business that's unrelated to hacking. that kind of got us interested plus it's a very extensive campaign targeting a lot of different computers. and so he wrote that up and he

found some real, some personal, some of the identities but he only took it so far probably because he had got a lot to do and he can only take it so far. his job is really to help the companies who are being attacked and finding out exactly who this guy is, is it necessarily his main job. so he published his research and then this other cyber security researcher thought well i'll see hoe i can get. neither of them speak chinese but they were able to find out a lot about this guy and this other cyber security researcher who we spoke to but he declined to be identity. he going by cyber sleuth. and he found another cyber business and also linked to that a personal blog where you get photos of this guy on vacation and posts about his buddhist faith and also a cell phone number which is the cell phone number we ended up calling when we thought we had even more fine details who this guy was which

was the fact he worked at a pla training institute. >> rose: people's liberation army. >> yes, the people's liberation army. >> rose: michael when you called him up whoever placed the call, what did he say? what was the conversation like? >> we really -- it was a short christ. it was probably less than eight minutes long. it was in chinese and it was placed by a reporter in the mainland who had gone to the city where he works. we needed him to confirm a couple things in order to make sure that we had the right guy. as dune pointed out he used some of the same infrastructure used for hacking. he registered a website for basically a mobile phone shop. he was making a little money on the side, and we needed him to confirm that that mobile phone shop was in fact his and that he has a relatively common last name and we needed to make sure he was the same guy who worked

at the pla's cyber security institute which basically trains military operations in cyber wars. so the phone call was quite simple. we asked a couple of initial questions, are you the man who works at this university. he says yes. i'm not teaching classes today, i'm outside the city. do you own this mobile phone shop. he says yes. i no longer visit. that was some time ago. and then we begin to ask questions about the hacking activity and the other thing he does. and he quickly set the tone changes immediately he says that's not convenient to talk about right now. we asked him whether he works for the government. he says no i can't answer any more questions and he hung up the phone but he confirmed that the mobile phone shop was him and therefore that got him back to a particular hacker identity and he had been using to sort of

also hack into these companies and he was the guy who taught at the cyber university and works for the pla. >> rose: to were they focusing on. >> this set of targets were varied. there were a lot of ones in southeast asia. there's an energy company, there was oil companies in vietnam. there's a newspaper in vietnam, there were embassies in europe. nuclear regulatory agency in europe. so it was across the board a lot of diplomatic ones and we find that a lot in these campaigns. keep in mind this is cyber spying they're interested in all sorts of things so they're getting economic targets and this goes on and on and on. >> rose: do we assume the united states is doing the same thing they're doing. >> i think to a degree there's no question the nsa collects

intelligence through cyber spying and that i've been told that 75% of what ends up in the whitehouse national intelligence briefing every day comes from our own cyber spy. >> rose: 75%, 75%. the briefing given by the president every morning comes from cyber spying. >> we did it under particular conditions we're outside the united states and in people's computers. if you talk to mike hagel he'll say this is a problem for us. he can go to china and say stop your spying. we do it too. we don target economic entities. we don't target corporations and not stealing the economic research of dupont or intel. we do what they consider traditional spying. the chinese don't and that's a distinction we make. whether china sees it that way or not is an entirely different question. >> rose: how do they know we

make that distinction. >> i think there are set of laws under which nsa operates and those laws make it relatively clear the kinds of targets that you have. but if you think about it, we also don't have the system. if we were to take for example some secrets of you know a new jet liner that airbus is making. we typically don't have a system that works that way. we don't pick winners and loser. >> in enact the government knows a lot of stuff they don't tell companies. if they could communicated better with companies about who is hacking them that would go a long time. >> rose: sometimes the companies don't know. >> yes, of course. that's part of the president's new cyber directive is to increase information sharing. >> rose: tell me more about the cyber doctrine the president announce the in his state of the union address. >> i can't claim to be an expert

but it's common sense things that still leave us with a lot of problems. i mean there's an increase theoretically to increase information sharing. they are also going to establish a set of standards for critical infrastructure providers. they'll have better cyber security standards and hopefully cut down on their vulnerability. all of that is fail a difficult problem to combat and most companies are totally unprepared. >> rose: michael. >> i think that's right. basically the executive order is supposed too, the cyber bill which has been four years in the making failed to make it through congress last year. it was supposed to address a come of key things. one was the information sharing the government has a lot of information about the bad guys they can give to companies but most of it is classified and this would set up the ways in which you would do that. it was to take this issue of critical infrastructure which is

being targeted power stations and pipe lines and you can put mal wear in those things and get them to not work. get them to not work in ways which could create huge problems. hurricane sandy maybe is just one small indication of what determined targeting electrical grids could do in the u.s. the idea was let's make that those companies have a minimum level of cyber security so that those networks, those critical network that if they went down could cause loss of huge economic damage. let's make sure they have to meet some basic requirements. it was regulation though and it was the year in which regulation was a dirty word for lots of people and the bill went down. the executive order tried to do some of that but i think most people will tell you that it can only go part way. >> rose: do they know more than we do about hacking and how to use cyber as a weapon. >> they put more emphasis on it. i mean they certainly put more emphasis -- they put a very high

priority and they have a lot more to gain. stealing intellectual property from chinese companies is not going to really get our company that much further, stealing ip from companies in the u.s., you know for a country like china that is trying to catch up, that offers a lot more to them. >> what are the unanswered questions for you, and you too, dune, having researched, having made the contact, having found out about xi that you did. what do you want to know. >> let me address the previous question first and then i'll answer that one. in terms of whether they're better than we are, i don't think they are. people like mike hagel former director of the cia say we're the best in the world.

the fact that the chinese -- maybe it's an indication their trade craft is not as good as ours that not that we're not doing -- that's a segue to your next question. like what is it that we don't know still. i mean you know we have a good idea that this activity's going on. we know that it's going on in a large scale but there's a real question about how this is being used. so it's a lot of information that's being stolen from a lot of networks that have to do with, you know, chemical formulas or plans for the latest semi conductor. the question is, you know, how does that information get absorbed by the chinese economy and distributed. you see a lot of new companies that make all sorts of new technologies, solar array etcetera that is becoming competitive on the global market. how much of that is stolen

material. the truth is that's a black box. we don't know there's research efforts going on in china, a lot of new companies coming up. the problem is we don't how much of that is genuine on their own research and how much is a base of this vast sort of vacuuming up of other people's ideas. >> rose: do identify assume from what you said that -- was an american operation? >> so the u.s. government is not officially acknowledged this but unofficially i think there's based on the what's come out so far i don't think there's much doubt that it was a u.s. operation at this point. and again mike hayden is very careful not to say he knows this is a u.s. operation. will say that that, at that point, you know, somebody crossed the rubicon. that was a point where you avoid a cyber weapon that made, that had a kinetic effect that took out part of the nuclear processing facility. that's a very big deal and the word changed after that. >> rose: mike hayden has told me that the chinese spy on us

more than any other country by far. >> sheer numbers that's probably true but again, you know, it's because they do both traditional spying and they do a vast vacuuming up of ideas from and research from corporations of just about every sort. it is a huge operation and a lot of data is being taken. there's a question, you know, it does raise some questions about how effectively that data can be used. some people say that the amount of theft is so bad that it's hard to imagine how you could process that amount of information usefully. >> rose: processing data has become a big question here. david brooks has written a couple columns about that. finally this, where do you go from here on this story? >> well, i personally, you know, in reporting on this, mike has actually done a lot more work than i have on this but i keep

on asking for good answers on it. you hear people say is you really have to increase the cost of this to the hackers. and i am just would like to hear some better answers on how you do that, you know. not just how you better defend yourself but how you're really going to change the incentive structure. it's a question for policy makers and it's a question for questions but how are you really going to change these incentives because right now it really papers to do this and there is no down side. >> rose: thank you dune lawrence, thank you michael riley. this is the cover, yes the chinese army is spying on you. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org